Economic Confidential

Everyone that has a radio or a TV on at home knows about Hurricane Sandy and how she brought death and destruction to Caribbean nations, especially Cuba and Haiti, how she brought the economy of the east coast of the United States to a standstill, causing death and unprecedented destruction to earth’s first nation.

Yes, we should know about Sandy, sweet feminine name and all. We know, though we are thousands of miles removed from that reality, ensconced in what should be our tropical paradise, where hurricanes are only the nightmares of characters in western and Asian movies. We know because the TV tells us, tells us insistently, ensuring we pay attention, that we feel empathy.

Though our should-be tropical paradise is one of those places that nature is very kind to, where natural disasters are mild in their rare showings, unpreparedness; outright callousness and the worst kind of I-don’t-careness ensures we suffer these mild upheavals worse than people in places nature is less kind to.

As the TV, and the internet, continues to beam ravaging Sandy’s path to our homes and offices, we see destruction, we see human suffering, we see death, but we do not see helplessness.

For anybody who has ever wondered what makes Americans tick tock, the way they responded to Sandy is a pointer. It shows a nation prepared, it shows a nation that is willing to do everything to get things back to normal ASAP, to minimise the suffering of the populace. The American response to disaster, exemplified by the Sandy relief effort, is everything Nigeria’s is not.

Immediately, and this is not an exaggeration, the storm passed, even before people had the chance to come out of the places they hunkered down to await the worst of the storm, President Barack Obama was in the air, surveying the damage and commiserating with the American people—GEJ, please write this pointer down.

For the last month or so, Nigeria, this land that nature so spoils with love, has reeled from the effect of massive flooding. The flooding, a result of heavy rainfall, was not unexpected. NEMA, Nigeria’s equivalent to America’s heroic FEMA, actually surprised even itself by predicting correctly that there would be massive flooding this year.

Now, in any sane society, when you get a warning such as the one NEMA gave, commonsense prevails and the government, in its role as custodian of the people commonwealth, hunkers down and prepares for the coming turbulence. Na, that is what happens in sane societies such as the USA, Nigeria has not been sane for a long, and this insanity may well prevail. Aside from Lagos, where the state environmental protection agency busied itself with dredging and expanding drainage systems across the state, Nigerian federal and state governments affectively forgot NEMA’s warning—or how else do we explain their appalling response to it? Surely, in the Nigeria way, budgetary allocations would have been made across board to reflect acknowledgement of NEMA’s warning, an allocation eager pockets would have smiled at as they swallowed up—mmmm.

The floodwaters, when they lapped at the shores of the River Niger and Benue, did not come with the suddenness of deadly flash flooding—Not with the force of a tsunami at least. I tell you, nature loves this part of the world. It was gradual, almost gentle, as nature chose to give the long-suffering masses a break, granting people the time to escape with their lives and the few worldly possessions they could drag away. Then the river Goddess claimed as much of Ala, the earth God’s domicile as she could capture, albeit temporarily, with fewer deaths than many would have anticipated.

The water swallowed the villages along the Niger at Lokoja, then turned the Bridge across the Niger into another decoration for the River Goddess’s domicile. On both sides of the river, Nigerians were stranded, with chaotic traffic making it impossible to go back when the journey ahead proved impossible. Hungry, dirty, and weary from days without proper sleep, they cried out to the heavens. Don’t ask me why they did not cry out to their government.

Sandy, a messenger carrying God’s anger, or so another of those crazy hell-and-damnation preachers in the US said, was not that merciful. She would have killed thousands had the Americans not heeded the warning of their seers. When meteorologists warned of an impending storm, America took notice and prepared. Those that needed evacuation were taken to places presumed to be safer, and when some of those “safe” zones indicated otherwise, they were moved yet again. The TV showed us National Guard trucks ferrying people, distributing sand and sand bags, we saw inflatable boots and determined firefighters and security services performing civic duties in a heroic way. Conversely, Lokoja was a study of a dearth of governance, of a country that exists by the grace of prayers—or why else would our leaders as us to pray about every situation.

In America, the government swung into action, doing their duty to the people for whom they exist. In Nigeria, it took social media and traditional media outrage for government to swing into action. As usual, their action was throwing money at the problem.

If we ever hope to be the nation we aim to be, at least I believe every patriotic Nigerian wants to see a nation that works; we need to begin to do the right thing.

In America, the president didn’t need to throw money at Sandy’s rage, instead the system, already in place to tackle instances like that, kicked into gear and he jumped into his chopper to ensue everyone is moving his own part of what is essentially a well oiled machine.

In Nigeria, our dear president formed committees and appealed for private sector funding to tackle a disaster that was predicted one year ahead. When you think about Sandy and the few days notice it gave America and the fact that anyone one with elementary knowledge of geography knows that water naturally will find its way—from Lokoja to the Sea, inundating communities along the way—you will understand what I am saying: our government had no reason being caught unawares.

The argument that fresh discoveries of oil reserves in various countries would create a glut in the market and drive down prices is probably also self-serving and inappropriate, as new oil discoveries have become an integral part of the supply curve for decades and yet have never prevented steady spiralling prices!

The other question is whether a higher price benchmark would result in economic doom as predicted by the IMF and others. The answer is the retrospective evidence of unfettered inflation, deepening poverty, increased debt accumulation, higher double-digit cost of funds to the real sector and rising unemployment in the last three years during which budget benchmarks were conservatively calculated below 25 per cent of the actual average.

In reality, national debt has doubled in the last three years, and service charges have similarly more than doubled, and is projected to increase to over N590bn; i.e. about 13 per cent of total expenditure in the 2013 budget proposal. Paradoxically, however, in spite of the actual reality of average crude prices over $100/barrel in 2012, domestic borrowing in excess of N720bn was instigated by a ‘ghost deficit’, which was induced by a very conservative crude oil benchmark of $72/barrel. Incidentally, such ‘ghost’ deficits are routinely financed at a cost often in excess of 15%!

It is difficult to understand why the IMF would recommend that we sustain huge ‘ghost deficits’ at such atrocious rates, when currently economically challenged countries like Spain and Greece are reluctant to borrow at over six per cent!!

It is also inexplicable that the IMF and others refuse to recognise that the crowding out of the real sector from the credit market is the collateral of government borrowing at such excessive rates of interest! The IMF pretends not to know that cost of funds to the real sector currently exceeds 20 per cent; i.e. rate levels that can neither stimulate consumer demand nor engender industrial growth and increasing employment opportunities.

Instructively, ‘ghost deficits’ and atrocious debt finance charges are actually the products of understated government benchmark prices rather than government overspending, as claimed by Scot Rogers. Paradoxically, increased government spending is, in fact, the universal antidote for job creation, increased consumer demand and economic regeneration.

Inexplicably, the low conservative budget benchmarks in recent years have indeed already predicated the economic doom, which the IMF and ‘company’ have associated with higher crude benchmarks.

We may now, briefly discuss the wisdom of the IMF’s misguided advice to quicken the rate of foreign reserves accumulation from revenue surpluses above conservative crude price benchmarks.

Once again, it is amazing that a respectable international agency would recommend that any country should accumulate savings with a paltry yield of 3 per cent, while that country borrows to finance ‘ghost’ deficits at the oppressive rates above 15 per cent; i.e. rates that are totally out of consonance for government risk-free sovereign debts. It is even more worrisome that respected Nigerian technocrats would accept such oppressive public sector economic management as best practice.

Instructively, this obtuse fiscal strategy has increased national debt accumulation just as quickly as it has added to our foreign reserves!! Thus, our consolidated national debt of over N8 trillion is now probably more than our current reserve base of about $40bn. It is even more baffling that our experts do not see the link between deepening poverty in spite of increasing wealth, with the recklessness of CBN’s substitution of naira allocations for the crude oil dollar revenue it illegally captures from the federation account!!

In view of the above considerations, the vociferous warnings of the IMF and Finance Minister as well as others should be seen to be ‘alarmist in nature’, as they are programmed to intimidate us with the fear of economic jeopardy, if we resist IMF’s misguided subtle directives for our economic suicide.